It is statistically proven that long term investments in equities (stocks) can outperform any other conventional form of investments or asset classes such as real estate, gold or bank/post office deposits. However, a lot of people hesitate to invest in the stock markets due to a number of reasons including risk of losing the capital, volatility in the stock market, confusion between speculative trading vs investment, and the uncertainty around the companies that they invest in or sheer lack of knowledge to pick the right stocks.

Investing in Mutual funds (Read Systematic Investment Plan or SIP) is probably the easiest and safest route to enter the stock market rather than going for direct stock investment. However, the return on investment can be much higher if you go for direct equities as long as you pick the right stocks and companies to invest in.

An ideal stock portfolio (Read my stock portfolio that I often update) should have a mix of large cap and midcap stocks across several sectors/industries to minimize your risks. However, if you are looking at a faster growth rate you can even think of a Portfolio that’s heavier on the Midcap side if not an All-Midcap Portfolio. Given below, is a list of 20 handpicked midcap stocks in India that I believe should offer significant wealth creation (at least four to five times, if not more) for investors in the next ten years.

My List of 20 Midcap Stocks

Most of the Midcap stocks in this list are those with the proven record of high return on investment (Based on the ROE, ROCE parameters, sales/profits growth numbers etc) over a period of time. I have also included a couple rather new players which I think will excel in their respective businesses and hence offer higher returns to investors. Further, these companies are run by excellent management and promoters too and hence the business health and longevity is not under threat.

(Some notable omissions include Page Industries, Eicher Motors etc which have run up quite a bit)

Investment Methodology

Since the markets have run up a lot, putting all your money as lump sum investment can be very risky at the moment. Hence the following is the methodology that I suggest.

Make a shortlist of 12-15 of the above midcaps for your investment. Give more weightage to sectors like Pharma, Banking and Auto ancillaries

Systematically buy these stocks either by putting a fixed amount per month into buying the shortlisted stocks or by adding these stocks at every market correction

Track your investment on a periodic basis for any change in fundamentals of the selected companies. You don’t need to track them on a daily basis as long as your choices are good and have a long term plan with them

Periodically (once a year may be) validate and check the sector-wise weightage of your holdings and readjust if required

Watch them grow! And do not let the market fluctuations affect your investment decision UNLESS the fundamentals of your invested companies change.

Disclaimer: I am not a qualified finance adviser or portfolio manager. Please consult the experts before taking any investment decision in the equity market. You may have to do further research on these stocks on financial portals, websites of these companies as well as mandatory filings by them before taking any positions. As a disclosure, I have investments in many of the stocks mentioned above at the time of writing of this post.

i know it would be time consuming to elaborate on each stock but would be very helpful for me.. am i in right direction of making portfolio or should i make some changes..your view would be valuable..kindly help

Okay, let me try to analyze with my limited knowledge (don’t consider it as the final recommendation as I am not qualified to do so)

Most of your picks are excellent long term portfolio stocks. A couple of observations: ICICI Bank, Tata Motors, ITC etc are great bottom fishing opportunities now and not necessarily foolproof long term bets. ITC used to be one, although it may not offer the same growth going forward, in my opinion. In the FMCG space, your other picks look very good. Also, consider something like Emami at corrections. In the banking space, consider HDFC and IndusInd for long term. In my opinion, Maruti is a must pick in the auto space so is Lupin in pharma. In IT, Tata Elxi is again a stock to pick in deep down market and sell in the bull market, for me. Others could disagree :) Infosys is good. Consider midcap picks like Persistent or Zensar. I don’t track Wabco, ZF, Granules, Suven, Shilpa etc.

But your thinking seems to be in good direction. Your portfolio is likely to see accelerated growth with higher allocation to Pharma, Auto Ancillaries, Banking/Finance with IT/FMCG providing a good stability and rupee trade advantage.

From your list, I would buy into TCS, Cipla etc for the long term portfolio. Welspun India, Zensar Technologies, Mayur Uniquoters, Kaveri Seed etc look attractively priced to me and I am tracking them with the intention of buying. Disclosure: Already bought Mayur and Kaveri.

I want to invest for medium term (2-3 years) and long term (6-10 years). Could you please give the 4-5 stocks in each category please with low-moderate risk? I want to invest in lump-sum not SIP, is it right time?

The following stocks look good to me at their current prices. Consider them as what I am buying than recommendation. If you are not comfortable with SIP, you should buy them at least twice (as nobody should miss out any deep fall which keeps happening every few years). All of them in fact are good long term portfolio stocks though the one listed in Medium term category are reasonably priced as of now, in my opinion.

Almost all of the stocks mentioned above are good for long term too. But you may want to add some large caps too to the above list to balance your portfolio. The following stocks overall look good to me to SIP on a monthly basis (Do your own research too before taking a call)

hello mr ajith…
i am 34 years age and have started up wit sip in 3 mutual funds… for a time frame of 10-15 years … i also want to start up sip in stocks like buy every month a few which ever has fallen down… so can u suggest me 10 stocks which r a mix of multibagger potential ….would be thankful to u god bless

Sorry, I have no idea about new multibaggers! However, most of the stocks listed above will continue to be be good wealth creators in my opinion. In addition, some large caps like Asian Paints, Bajaj Finance, Lupin, Maruti etc could be part of the long term portfolio.

Nithin, All of them are still good for long term in SIP investment mode. Kaveri Seeds is one of the stocks where I am waiting for some clarity myself as well. Be sure to SIP some large caps as well (Refer to the comments above).